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False or misleading representations explained
It is unlawful to make false or misleading representations about products and services when supplying, offering to supply or promoting those products or services.
For instance, a business must not make false or misleading representations about:
- the standard, quality, value or grade of products or services
- the composition style, model or history of products
- whether the products are new
- a particular person agreeing to acquire products or services
- testimonials by any person relating to products or services
- the sponsorship, approval, performance characteristics, accessories, benefits and uses of products or services
- the price of products or services
- the availability of repair facilities or spare parts
- the place of origin of a product - for example, where it was made or assembled. For more information, view our Country of origin claims page
- a buyer's need for the products or services
- any guarantee, warranty or condition on the products or services. For more information, view our Refunds repairs and returns section.
Courts have found false and misleading representations in these cases - a:
- manufacturer sold socks, which were not pure cotton, labelled as ‘pure cotton’
- retailer placed a label on garments showing a sale price and a higher, crossed-out price. However, the garments had never sold for the higher price
- business made a series of untrue representations about the therapeutic benefits of negative ion mats it sold
- motor repairer told a consumer more repair work was needed on their car than was necessary.
Whether a representation is considered false or misleading will depend on the circumstances of each case, and what misleads one group of consumers may not necessarily mislead others.
For example, people concerned about their body image may be more vulnerable to products claiming to enhance beauty. Whether a representation about a beauty product was misleading would depend on whether it might mislead a reasonable person within this group.
A representation can be misleading even if it is partly true.
Testimonials
Testimonials - also known as reviews - are statements from customers about their experience with a product or service. Businesses often use them as promotional marketing tools.
It is unlawful to make, rely on or use false or misleading testimonials.
Testimonials can appear:
- on a business’ website
- on independent review websites or forums
- in marketing emails
- in newspapers.
Businesses which commonly rely on testimonials include:
- alternative health care businesses
- restaurants
- weight loss service providers
- estate agents.
Genuine customer reviews and testimonials increase consumer confidence and can provide valuable independent information about a product or service. False testimonials may persuade consumers to make the wrong choices.
Tips for businesses
- Make sure any testimonials you use are true and correct
- Don’t post or publish misleading reviews
- Omitting negative reviews can be as misleading as posting false positive reviews
- Be transparent about commercial relationships with anyone providing a testimonial
- Keep records of all customer reviews and testimonials. Courts may consider testimonials to be misleading unless you can prove otherwise.
Online testimonials
When shopping online, we advise consumers to be wary of:
- review websites that appear to be associated with a product or business
- reviews that criticise a specific product while promoting a competitor’s product
- the same review appearing multiple times or under different names
- reviews with discount codes or information about where consumers can purchase products or services
- email addresses with three or more numbers at the end - this may mean an automated program has created the review
- testimonials that sound like press releases or advertisements, or have industry specific words that consumers are unlikely to use
- websites that only display a few reviews that are all positive, or a large amount of reviews that are either very positive or negative (for example, rating one or five stars out of five).
Sale or grant of an interest in land
A business must not make false or misleading representations about the sale or grant of an interest in land.
A business must not:
- represent it has a sponsorship, approval or affiliation when it does not
- make false or misleading representations about the:
- nature of the interest in the land
- price, location, characteristics or use that can be made of the land
- availability of facilities associated with the land.
For example, a real estate agent would be misrepresenting the characteristics of a property if advertising ‘beachfront lots’ that do not front the beach.
Employment and business activities
It is unlawful to make false or misleading representations about the:
- availability, nature or terms and conditions of employment (or any other matter relating to the employment)
- profitability, risk or other material aspect of any business activity that requires work or investment by a person.
Misleading conduct as to the nature of products and services
A business must not engage in conduct likely to mislead the public about the:
- nature
- manufacturing process
- characteristics
- suitability for purpose, or
- quantity
of any products or services.
Examples:
An importer sells bicycle helmets with labels indicating the helmets meet a mandatory safety standard, even though the helmets have not been laboratory tested to check whether they meet the standard.
When stocks of organic eggs ran out, a supplier packed eggs in a carton labelled as ‘organic’ even though the eggs were not.
Exceptions for information providers
‘Information providers’ include media organisations such as:
- radio stations
- television stations
- publishers of newspapers or magazines (including online).
Information providers are exempt from liability for false or misleading representations.
However, this exemption does not apply to:
- conduct or representations about employment matters
- supply of products or services by the information provider
- publication of advertisements.
Publishing an advertisement
Information providers and other businesses may not be responsible for publishing a false or misleading advertisement if they can prove that they:
- are in the business of publishing or arranging for the publication of advertisements
- received the advertisement for publication in the ordinary course of this business, and
- did not know, and had no reason to suspect, that the advertisement was false or misleading.
Penalties
Making false or misleading representations is an offence.
The maximum civil pecuniary and criminal penalties for a body corporate are the greater of:
- $10 million, or
- three times the value of the benefit obtained from the offence, or act or omission, by the body corporate and any related bodies corporate if the benefit obtained can be determined by the court, or
- if the court cannot determine the value of the benefit, 10 per cent of the annual turnover of the body corporate.
The maximum penalty for a person is $500,000.
Other civil remedies include:
- injunctions
- damages
- compensatory orders
- orders for non-party consumers
- non-punitive orders
- adverse publicity
- disqualification orders.
Before taking enforcement action, consumer protection agencies can:
- require a business to provide information that will support claims or representations made about goods or services
- accept court-enforceable undertakings
- issue public warning notices.